CBS On Carriage Dispute With Dish: “We Remain Far Apart On Terms”

UPDATED at 11:55AM PT with Dish comment:CBS says it and Dish Network “remain far apart on terms,” meaning the carriage dispute affecting customers in 18 U.S. markets could drag on, which is especially unwelcome news for football fans on the eve of the pigskin-packed Thanksgiving holiday period.

The dispute that caused CBS to go dark for Dish customers before dawn Tuesday in major markets such as New York, Los Angeles and Dallas could last a while, based on the latest sentiment from CBS, delivered this morning in a bare-knuckled press release.

“We obviously want to strike a fair deal with Dish as soon as possible – but we remain far apart on terms,” CBS said, pointing out the last time its channels went dark was during a previous impasse with Dish in 2014. It went on to say that “pulling content providers off the air is Dish’s way of doing things.” As it is “desperate to retain subscribers,” Dish proposed an extension of the contract expiration, CBS maintained, but CBS would not agree because they typically extend contracts only when an agreement is close.

Dish provided Deadline with this statement in response to the CBS comments: “To be clear, CBS blacked out its own viewers. CBS threatening families this Thanksgiving and to drag this out for weeks would be a punishment solely at the hand of CBS. It was their choice, and at this hour we continue to wait for CBS to respond to our latest offer.”

As recent carriage deals like Charter’s reup with Viacom have shown, while subscriber fees remain the core issue, the elements that go into an agreement have become more varied and complex as the media environment and technology evolve. In the case of Charter-Viacom, the parties added wrinkles like co-production of programming and shared measurement and advertising tools.

For CBS, the steady growth of its All-Access service (which, combined with Showtime, is expected to surpass 4 million subscribers by the end of the year) presents new challenges during negotiations. Many MVPDs and local affiliates view the $6-a-month OTT service as a work-around designed to undermine their position in the TV ecosystem. During the Nov. 2 CBS earnings call with Wall Street analysts, CEO Leslie Moonves repeatedly emphasized that cord-cutting is a positive trend for CBS in large part because its margins are higher from All Access and other skinny-bundle offerings carrying CBS.

The satellite provider has pointed customers to a website, dishpromise.com, which has contact information for local CBS affiliates and their advertisers. The aim is to apply pressure to those points in order to get CBS corporate execs’ attention.

The timing of the fight is inopportune for football fans, as CBS will broadcast an NFL game on Thanksgiving Day as well as SEC college games Friday and Saturday and an NFL doubleheader on Sunday.

While CBS has the most-watched broadcast network, more of a sticking point for Dish are modestly rated cable networks like Smithsonian, Pop and CBS Sports Network. CBS maintains that while Dish has complained about the fees being asked for the cable networks, it has paid “at least one cable network more than double our asking price, for far less than half the ratings.”

Dish has been running a promotion since the spring offering a $10 reduction in some customers’ monthly bills if they drop local channels and agree to have Dish install a free antenna.

Carriage disputes, while never uncommon, have grown more frequent and intense and as cord-shaving and cord-cutting increases and entertainment options proliferate. Retransmission revenue, given other uncertainties and shifts in the media business, is under increasing pressure, and CBS is among the programmers pressing for aggressive terms in order to meet projections it has made for Wall Street.

On the Nov. 2 earnings call, COO Joseph R. Ianniello said retransmission and reverse compensation revenue well on its way to hitting the company’s target of $2.5 billion by 2020. The category grew 28% in the third quarter and has already equaled the total for all of 2016.